By Jen Hutter
June 18, 2019
Time to REThinkTM Your Investor Relations Strategy?
Investor relations is one of the most critical components of an investment management business, yet it is often the most overlooked role and the last position filled in an organization.
Investor relations is one of the most critical components of an investment management business, yet it is often the most overlooked role and the last position filled in an organization. Investors are not just capital commitments, they are the key relationships you need to continually raise capital in the marketplace. Therefore, in a world where relationships raise capital, setting up a proper investor relations infrastructure is key to building longer lasting relationships with your investors
Outlined below are four cornerstones that are paramount in building a best-in-class investor relations program.
Check-in with your Investors
It seems so simple, but the majority of fund managers do not solicit feedback from their investors on an ongoing basis. And, those that do, often do not create forums where investors can provide candid feedback. Most of us think we know our investors, but our experience conducting investor surveys shows that investors typically do not give candid feedback to their managers directly. Over time, this could result in a lower commitment size or worse, being caught off guard by an investor choosing not to re-up with you in your next vehicle. There are three key approaches to soliciting quality feedback in an organized manner – outsourcing an anonymized verbal investor survey every two to three years, sending a brief e-survey once a year, and/or meeting with investors annually, especially when you are not raising money. In our experience, outsourced investor surveys produce two key results: (i) investors are very comfortable providing candid feedback that they know will be anonymized back to the manager (our average response rate is over 70%!), and (ii) it demonstrates the fund manager’s commitment to continually improve the relationships with its investor base. Managers can use e-surveys to solicit more direct feedback on content and frequency of annual meetings, webinars, and reporting. Lastly, as you continue to nurture your existing relationships, remember that the non-marketing period or the “golden period” as we like to call it, serves as a great time to visit with your investors, not only to give them an update on your fund and firm, but also to get an update on their portfolio and views on the market, without having to ask for capital.
Communicate Regularly
Communication is critical, not only for existing partners, but also for prospects. While existing investors will receive quarterly reports and more detailed information, include prospects on your ongoing communications. Seeing regular updates from you will keep you top of mind. In addition, including your prospects in your ongoing communications will allow them to get to know you as an investor and as a fiduciary. First, set up a well thought out communication plan with relevant touchpoints at least quarterly. These milestones may include acquisition and disposition announcements and/or quarterly market updates, bi-annual or annual webinars, and an annual letter. Take the time to create one-page overviews that an investor or prospect can easily open and read (hint: investment committee memos do not get read unless the investor is in due diligence). Hosting 30 to 45-minute webinars once or twice a year will allow you to give your investors and prospects a quick snapshot of what you are seeing in the marketplace and high-level detail on any recent acquisitions or dispositions (keep deep dives into deals on a one-on-one basis and at the investor’s request). An annual letter is a great medium to share your market perspectives. Investors have seen the market data, what they really want is your perspective on how your team will use that data to invest wisely.
Keep Collateral Up To Date
Most investors receive 200+ inquiries per year. Keep your firm’s image and collateral sharp and updated at least bi-annually. Aim to standout to stay relevant. Remember, your job is to make it easy for an investor to invest with you. This means you have done all the heavy lifting and created content that allows them to easily understand your value proposition and champion it within their organization. The most important marketing material includes your presentation, one-page overview, and track record. You should always be prepared to pitch whether you are fundraising or not. Remember, the best time for investors to get to know you is when you are not marketing, during the golden period. Equally as important, and often overlooked, is your firm’s online image. Ensure that your website is up to date and properly reflects any organizational changes. Aim for less is more over stale content. Don’t forget that google and LinkedIn are
commonly checked by prospects during due diligence. Keep your firm’s value proposition consistent across all mediums.
Now What?
Setting up a quality, high-caliber investor relations program takes time, resources, and effort. Successful investment managers understand the importance of investor relations and make it a key part of their platforms. Remember, relationships raise capital. Take the time to set up a proper investor relations infrastructure. Your next capital commitment just may depend on it.